Reuters International

ABU DHABI (Reuters) - Yemen foiled an attack by al Qaeda militants that planned to target local administrative headquarters in the city of Mukalla the UAE state news agency WAM said on Thursday, after security forces found a car laden with explosives that an al Qaeda suspect was planning to blow up.

"We received intelligence about al Qaeda's plans to launch a major terrorist attack in Mukalla aimed at destabilising the city and creating panic amongst its residents," the news agency quoted General Faraj Salmin, commander of Yemen's Second Military Zone in the eastern province of Hadramout, as saying.

Al Qaeda in the Arabian Peninsula (AQAP) largely withdrew from Mukalla in April when government and Emirati soldiers seized the city that had been used by Islamist militants to amass a fortune amid the chaos of civil war.

Special teams from the UAE Armed Forces are providing operational assistance to Yemeni forces to rid the city of remaining AQAP members.

An al Qaeda IT expert, known as Abu Hafs Al Shahri, was arrested during one of the search operations in the city, WAM said.

Mukalla has been the centre of a rich mini-state along the Arabian Sea coastline that AQAP built up over the past year as it exploited conflict between government loyalists backed by a Gulf Arab coalition, which the UAE is part of, and Houthi rebels allied with Iran.

AQAP, which has planned several foiled bombing attempts on Western-bound airlines and claimed credit for the 2015 attack at the Charlie Hebdo magazine's offices in Paris, sought to carve out a quasi-state last year offering to export 2 million barrels of oil with the approval of Yemen's government, which refused.

(Reporting By Maha El Dahan, Editing by Tom Finn and Angus MacSwan)

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